The Digest #69

Published on February 24, 2021

“The best thing a human being can do is to help another human being know more.”

— Charlie Munger

The Daily Journal Corporation Annual Meeting will be live-streamed on Yahoo! Finance today at 1:00 pm Eastern time and should last approximately two hours. If past meetings are any guide, discussion of Daily Journal itself will be limited and most of the meeting will involve a Q&A session in which Charlie Munger will address a wide variety of topics. For information, videos, and commentary on the 2020 Daily Journal annual meeting, please read the Rational Reflections issues published on February 19, 2020 and March 4, 2020.

Berkshire Hathaway’s annual meeting on May 1 will also be a virtual event. Last year, Charlie Munger did not attend the Berkshire meeting and it is not clear if he will attend this year, so the Daily Journal meeting today is a good opportunity to hear from him. However, since Berkshire’s annual report is scheduled to be released on Saturday morning, I suspect that any comments on Berkshire will be general rather than related to 2020 results. 

For those interested in Daily Journal (the actual business), I haven’t written about it in several years but this article from 2016 provides an update of an earlier profile of the company that I wrote in 2011. Since that time, there have been important developments in the software business which are described in the company’s latest 10-K report

I recently discovered The Profile, a newsletter written by Polina Marinova Pompliano, after listening to Jim O’Shaughnessy interview her on a recent Infinite Loops podcast. Earlier this year, The Profile published an article about Charlie Munger that includes a number of links and videos. I recommend checking it out. 

Semper Augustus Report on Berkshire Hathaway

Christopher Bloomstran has released his annual letter to Semper Augustus clients which includes an extensive discussion regarding Berkshire Hathaway. I have found prior Semper Augustus discussions of Berkshire very well researched and presented. All of these letters are also available to the public. 

Bloomstran goes through Berkshire’s long history under the management of Warren Buffett, provides an update of recent financial results, and makes a number of projections for the next decade. I won’t attempt to summarize the letter here, but suffice it to say that he is quite bullish on Berkshire’s prospects.

Berkshire’s annual report is scheduled to be released on Saturday morning. 

As an aside, it has been ten years since I published In Search of the Buffett Premium which was my attempt to provide a brief history of Berkshire Hathaway and examine its future prospects. For readers who are interested in this (very outdated) report, it is now a free download at the link shown above. 

A Civilized Bitcoin Debate

Bitcoin has been on a tear lately but after reaching a record high of $58,331 on February 21, the cryptocurrency dropped precipitously to around $47,500 as I type this on the evening of February 23. It seems like people either love it or hate it, and there’s usually a lot of anger involved when bulls and bears debate.

Although not free of some tense moments, I found Both Sides of the Coin: A Civilized Bitcoin Debate to be interesting and informative. Grant Williams moderates a debate between Mike Green of Logica Funds and Nic Carter of Castle Island Ventures & CoinMetrics. The discussion took place in late January, prior to the recent Bitcoin rally.

One of the points that came up was the question of what happens to Bitcoin as an asset if the internet somehow goes down or ceases to exist. The point was made that, unlike physical gold, the value of bitcoin in a digital wallet will always be tied to the existence of the network and access to the blockchain. On the other hand, physical gold in hand is physical gold in hand — you can use it in trade directly if needed.

In today’s modern economy, to what extent should investors consider the risk of a lengthy or even permanent disruption of the internet? This can impact much more than cryptocurrency given how many business models are inexorably tied to the internet today. Considering the impact of temporary disruptions should be a checklist item for any investment, but there are limits to how much we can plan for true apocalyptic scenarios. 

Another Weekend Links edition of Rational Reflections will be sent out on Friday. 

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The Digest #69